The problem with his argument is that it rests on the American economy having a realistic chance of collapse that at least equals if not exceeds that of the Great Depression. "With 20 or 30 percent of Americans facing a realistic probability of losing their jobs" - I don't think that's realistic. We've seen worse unemployment rates in my state within the past decade. We haven't even hit the problems of the early 80s. So, it's premature to assume that we're going to see a massive collapse that sees unemployment at 25-35% as he suggests.
In terms of government spending, there are some areas that we should scale back, but government spending doesn't hurt economic growth unless it's simply spending for consumption. If it's spending for investment (such as improvements in infrastructure, education of future generations, etc.) it doesn't harm economic growth. The few trillion we're spending overseas in military jaunts will hopefully get a huge cut in the next administration.
Pensions need a complete overhaul. The problem is that people want pensions that are written as "you get x% of your final salary each year for the rest of your life plus health insurance". That's a nebulous liability. If you want to pay an insurance company to take on that liability, you can't afford it and governments are the only ones that won't go bankrupt paying it (since they'll just push the burden onto future generations). Towns and cities are getting hit by this bad. It is my belief that the government should provide for you as long as you live - BUT the government should be providing for you at a very low rate. Any luxuries you want are your problem. If you want to be able to pass your house to your kids, you better have saved up to cover your retirement or you can reverse mortgage the house and when you pass, the house goes to the bank. I do believe that government must provide for its citizens. It should not provide a middle-class lifestyle. It can't. It's definitionally impossible to provide everyone with a middle-class lifestyle or better.
Likewise, health must be re-understood. First, we love new things in America more than anywhere and as such we demand new (even if it isn't better). For example, there is no evidence that Nexium is better than Prilosec (both made by AstraZenica and Nexium being an isomer of Prilosec), but Nexium is newer and under patent and Rx and costing many times more. And so many people go for it because the cost is likely to be the same to them (via insurance). People aren't price-sensitive in medicine. I don't want people depriving themselves of treatment, but Rx allergy medicine is often near identical to what you can get OTC today. However, many go for the Rx because it's just as cheap (for them). It's wasteful! Incredibly! Similarly, new treatments are expensive and then come down in price (much the same way computer technology works). Blu-Ray players cost $1,000 a couple years ago. Now you can find them for under $300. The problem is that we won't tell someone, "sorry, that treatment is really new and we just won't cover it until it gets cheaper". The questions is: how do we enable people to get the latest treatments as soon as possible without causing costs to be enormous? And there might be trade-offs that no one wants to make. We also need to become a more fit society. No matter how much efficiency we put into our healthcare system, we will pay a lot more than anyone else because we are a really unhealthy people. We need to change that. Now! I hate suggesting that a monetary incentive be in there, but that's what does it for people. No environmental or congestion plea could stop SUVs, but $4 gasoline did in a couple months. If you tried to sell one, you were getting nothing for it. Part of the issue here is what health problems are a person's fault and what aren't? We like to think of weight as a person's problem. Smoking definitely is and it's time smokers paid more in group insurance policies. Weight is hard. You definitely have some control over it, but then again, you have some control over cancer as well (from sun block to eating well and having regular screenings). I don't want to propose anything because I think it's all crap, but we need to loose the weight or stop complaining that health care costs too much.
As he mentioned, liability reform is important. Every time you buy anything - from an x-ray at the hospital to a DVD at Target - you're paying for liability insurance on top of the product's price. Insurance is expensive because, while one can mostly calculate out things with fun actuaries, you need to keep quite the pad in case you're under with your calculations.
I'd disagree that we don't want to increase spending - at least temporarily. What keeps a market economy going is stability. With instability, we hoard. In the short term, we need people to feel like there is stability so that they act normally. If that involves the government putting some money out there, so be it. A lot of the suggestions are great in the long-run, but I think the next 12-18 months are important too.
I'm not as anti-union as he comes off, but to an extent unions are biting the hand that feeds them. No, not the companies they work for. Rather, the market force that drives up wages: automation. Workers can only be compensated (at maximum) at their rate of production minus costs (like hiring and administration). If the production of the average worker in a union doesn't go up, neither can wages or benefits. In fact, benefits might slip if the cost of such benefits outpaces inflation. Right now, we're seeing a very anti-automation union stance. Europe and Asia are starting to use more capital per worker than the United States. Americans are great workers, but you just can't compete en-masse if you put yourself at such a huge capital disadvantage. I like unions EXCEPT for their anti-automation stance. Restricting capital kills businesses.
In terms of education, I think we need more informal education. How much have we all learned on this site? Wikipedia? We're seeing the opportunity to really get knowledge out there and to interact more efficiently. Heck, those online chat things that businesses employ for support are a great source of inspiration. They allow one employ to deal with several customers at once. And unlike a classroom, you don't have the issue of interrupting a lecture to ask. And that knowledge could be gone over and made into an FAQ-like structure for a topic.
In terms of labor markets, we're plenty deregulated. American businesses already see incredible freedom here. Minimum wages are very, very low. I'm not someone that goes around saying that the poverty line is set 3x too low (that it should be 30k for a single person rather than 10k), but I'd really rather not see wages fall at the lowest end. I'm a single person living in walking distance of the T (subway) in Cambridge and live off $15k per year for everything (except this year which saw a shiny new MacBook Pro). I'm not depriving myself of anything I want, but I don't just spend to spend. I don't regularly eat out, buy drinks at bars, spend lots on random expensive things, whatnot. Still, people need a certain level.
Similarly, I think affirmative action is in my best interest in the long-run. It's annoying as hell. Heck, even most African-Americans surveyed are against it. However, underclasses are bad for a society. Underclasses cause friction and havoc that take money from me. People who think a system is stacked against them try to go around it. PG commented a few days ago saying, "Markets interpret social engineering as damage and route around it." If there is one thing I want, it's that people work inside the system. Plus, it's inherently unfair that some people are the decedents of historically discriminated people and, well, I am as well, but they're people that are seen in a good light in modern America which gives me an advantage. But beyond the unfairness, giving people stuff gives them things to loose. That's good for me because the more you have to loose the less chance you're going to do something stupid to me.
I really want to applaud Dr Greenspun for offering his knowledge to others freely. It's wonderful.